NRG skirts utilities going straight to power consumers

David Crane of NRG Energy Inc. during a panel discussion last year in Houston.

NRG Energy Inc., the biggest power provider to U.S. utilities, has become a renegade in the $370 billion energy-distribution industry by providing electricity directly to consumers.

Bypassing its utility clients, NRG is installing solar panels on rooftops of homes and businesses and will eventually offer natural-gas-fired generators to customers to kick in when the sun goes down, Chief Executive Officer David Crane said in an interview.

NRG is the first operator of traditional, large-scale power plants to branch into running mini-generation systems that power a single building. The endeavor strikes at the core business of utilities that have earned money from making and delivering electricity ever since Thomas Edison flipped the switch on the first investor-owned power plant in Manhattan in 1882.

Consumers are realizing "they don't need the power industry at all," Crane, 54, said at this year's MIT Energy Conference in Cambridge, Mass. "That is ultimately where big parts of the country go."

NRG, which acquired GenOn Energy Inc. for $2.2 billion in December and Texas Genco for $5.8 billion in 2006, has stakes in 94 power plants, with all except about 1.5 percent of the generating capacity driven by fossil fuels.

With $8.4 billion in 2012 sales, the Princeton-based company has become strong by supplying power to the businesses that it's now competing against with its NRG Residential Solar Solutions unit. The shares dropped 0.35 percent to $25.69 on Monday.

"It is obviously a potential threat to us over the long term," said Jim Rogers, chairman and chief executive officer of Duke Energy Corp., the largest U.S. utility owner.

Other energy companies are challenging traditional utilities by providing rooftop solar panels to power individual buildings. That includes SolarCity Corp., which raised $92 million in its December initial public offering. The San Mateo, Calif.-based company had installed 287 megawatts of commercial and residential solar projects, as of the end of last year.

It's one of at least a dozen U.S. companies that provide rooftop panels at no upfront cost to customers, who typically make fixed monthly payments for the output under decades-long contracts, known as solar leases or power-purchase agreements.

These companies typically offer customers lower prices for power from rooftop panels than they pay utilities, reducing monthly bills. The model is contributing to the growing wedge between utilities and consumers.

The other part of the package is the growing underground network of pipes that delivers gas to about half the homes in the country. Crane wants to provide customers with fuel cells and microturbines, which produce electricity from gas. "The individual homeowner should be able to tie a machine to their natural gas line and tie that with solar on the roof and suddenly they can say to the transmission-distribution company, 'Disconnect that line.' " Crane said.

NRG skirts utilities going straight to power consumers

David Crane of NRG Energy Inc. during a panel discussion last year in Houston.

NRG Energy Inc., the biggest power provider to U.S. utilities, has become a renegade in the $370 billion energy-distribution industry by providing electricity directly to consumers.

Bypassing its utility clients, NRG is installing solar panels on rooftops of homes and businesses and will eventually offer natural-gas-fired generators to customers to kick in when the sun goes down, Chief Executive Officer David Crane said in an interview.

NRG is the first operator of traditional, large-scale power plants to branch into running mini-generation systems that power a single building. The endeavor strikes at the core business of utilities that have earned money from making and delivering electricity ever since Thomas Edison flipped the switch on the first investor-owned power plant in Manhattan in 1882.

Consumers are realizing "they don't need the power industry at all," Crane, 54, said at this year's MIT Energy Conference in Cambridge, Mass. "That is ultimately where big parts of the country go."

NRG, which acquired GenOn Energy Inc. for $2.2 billion in December and Texas Genco for $5.8 billion in 2006, has stakes in 94 power plants, with all except about 1.5 percent of the generating capacity driven by fossil fuels.

With $8.4 billion in 2012 sales, the Princeton-based company has become strong by supplying power to the businesses that it's now competing against with its NRG Residential Solar Solutions unit. The shares dropped 0.35 percent to $25.69 on Monday.

"It is obviously a potential threat to us over the long term," said Jim Rogers, chairman and chief executive officer of Duke Energy Corp., the largest U.S. utility owner.

Other energy companies are challenging traditional utilities by providing rooftop solar panels to power individual buildings. That includes SolarCity Corp., which raised $92 million in its December initial public offering. The San Mateo, Calif.-based company had installed 287 megawatts of commercial and residential solar projects, as of the end of last year.

It's one of at least a dozen U.S. companies that provide rooftop panels at no upfront cost to customers, who typically make fixed monthly payments for the output under decades-long contracts, known as solar leases or power-purchase agreements.

These companies typically offer customers lower prices for power from rooftop panels than they pay utilities, reducing monthly bills. The model is contributing to the growing wedge between utilities and consumers.

The other part of the package is the growing underground network of pipes that delivers gas to about half the homes in the country. Crane wants to provide customers with fuel cells and microturbines, which produce electricity from gas. "The individual homeowner should be able to tie a machine to their natural gas line and tie that with solar on the roof and suddenly they can say to the transmission-distribution company, 'Disconnect that line.' " Crane said.